iSure Insurance Agency

Directors and Officers Insurance vs. Indemnification

The purpose of directors and officers liability insurance is to protect managerial level positions in the event they are sued for wrongful acts performed while managing a company. Shareholders, disgruntled employees, and unhappy customers can file lawsuits against a business or organization (and they do), but they can also file lawsuits against specific individuals. If those individuals don’t have the proper coverage, they could be at risk for losing their personal assets.

Common Lawsuits

There are a variety of reasons directors and officers could be sued. Here are some of the most common.

Misuse of company funds
Breach of fiduciary responsibility
Fraud
Misrepresenting company assets

Coverage Included

There are many different types of policies available. Directors and officers insurance brokers, like those found at iSure Insurance Agency, will be able to advise you on a policy that best meets your individual needs. Most policies will include covering costs associated with legal fees, court fees and any damages.

Indemnification

Most high-level managers have indemnification protection when making decisions on behalf of a company, which should not be confused with directors and officers coverage. The difference is that indemnification protects managers from any personal liability when lawfully acting on behalf of a company. It does not protect managers from any unlawful wrongdoing.